Whitlam resignation canvassed

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Turbulent events and discussions leading up to the resignation
of former NRMA Insurance Group chairman Nicholas Whitlam as a
director of the company in April 2001 were recounted in the NSW
Supreme court yesterday.

IAG (the renamed NRMA Insurance Group) director John Astbury
yesterday gave his recollection of conversations with Mr Whitlam
and fellow directors about Mr Whitlam's resignation.

Mr Astbury agreed with Mr Whitlam's counsel, Tony Bannon, SC,
during cross-examination that he had personally promised Mr Whitlam
support for a prompt retirement payment of the maximum possible
amount allowed under the Corporations Law if Mr Whitlam resigned
promptly to reduce boardroom dissension.

But he denied he was speaking for anyone other than himself when
he gave that undertaking, although he thought it likely most other
directors would also support that position. Director Anne Keating
was opposed to the payment and Mr Astbury did not know where former
CEO and director Eric Dodd stood on the matter.

The evidence came on day three of the hearing of a case brought
by Mr Whitlam against IAG for damages arising from what he claims
was unconscionable conduct by IAG in delaying his retirement payout
for two years and underpaying him. IAG paid him a retirement
benefit of $637,858.

But Mr Astbury stopped short of acknowledging that the proposed
retirement payment was an "inducement" for Mr Whitlam to resign,
saying the word had strange connotations.

He agreed the promised benefit was a motivating factor in
getting Mr Whitlam to resign to ease the conflict on the board
between Mr Whitlam, Ms Keating and Mr Dodd.

Mr Astbury said he relied on legal advice to defer the payment
pending a resolution on the matter being put to shareholders,
because they had made it clear they wanted to vote on non-executive
directors' retirement benefits.

Mr Astbury agreed that if the maximum retirement benefit had not
been promised to Mr Whitlam there had been a risk that he would not
resign and board dissension would continue.

Director Geoffrey Cousins' recollection of events was that Mr
Whitlam's resignation had been discussed in March 2001, as was a
retirement benefit.

Mr Cousins told the court Mr Whitlam also canvassed the
possibility of "a much greater sum of money beyond the retirement
benefit" being paid in return for not taking a legal action against
the company. Mr Cousins said he told Mr Whitlam that the
Corporations Act laid down how much non-executive directors could
be paid at retirement and there was no capacity to pay any more. He
said that in a later conversation with Mr Astbury Mr Cousins said
he thought that the request for additional money was improper.